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Citizens Advice has said an extra room "can be a lifeline" for a disabled person, calling it "as vital as a guide dog or a wheelchair".

Chief executive Gillian Guy said for many people a spare room "is essential to their wellbeing" as it is needed for dialysis equipment or room for a carer.

A group of MPs said disabled people are suffering 'severe financial hardship and distress' as a result of the 'bedroom tax'. Credit: Reuters

Ms Guy said: "Many sick and disabled people have bedrooms which have been adapted to help them to cope with their condition.

"Moving disabled people out of their houses is not only a potential risk to their health, but can cost the individuals affected and councils significant amounts of money if they need to start from scratch in a new home."

The head of homeless charity Crisis has said the Government risks forcing poor people out of their homes because of changes to housing benefit such as the 'Bedroom Tax'.

"The Government must listen to this verdict from MPs across the political spectrum and rethink its cuts to Housing Benefit, particularly for those who cannot change their circumstances by working or who are struggling in low paid jobs. Without prompt action, the Government risks driving homelessness still higher."

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Shadow work and pensions secretary Rachel Reeves said it was "completely unfair" that many disabled people were hit by the "bedroom tax" and charged for the space used to store essential medical equipment.

"Britain can't afford another year of David Cameron and Nick Clegg's tax on bedrooms," Ms Reeves said.

A group of MPs said disabled people are suffering 'severe financial hardship and distress' as a result of the 'bedroom tax'.. Credit: Dominic Lipinski/PA Wire

"If they won't listen to the country and scrap their hated bedroom tax, then a Labour government will," she added.

Our reforms are necessary to restore fairness to the system and make a better use of social housing. Unreformed, the Housing Benefit bill would have grown to £26 billion in 2013/14.We have given councils £345 million since reforms came in last year to support vulnerable groups, especially disabled people.

The removal of the spare room subsidy means we still pay the majority of most claimants' rent. But we are saving the taxpayer £1 million a day which was being paid for extra bedrooms and are freeing up bigger homes for people forced to live in cramped, overcrowded accommodation.

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The work and pensions select committee voted down a proposal from Labour MP Sheila Gilmore to call for the policy, officially known as the removal of the spare room subsidy, to be scrapped but it did urge ministers to exempt:

anyone whose home has been adapted to help them with their disability

any household containing a claimant receiving disability benefits at the higher level

carers living with disabled people should be exempt from the benefits cap

It said that it was "particularly unjust" for homeless people to be subjected to the benefits cap, as they have no choice over the temporary accommodation in which they are placed, which may force them over the limit. The committee called for them to be exempted from the cap.

Disabled people are suffering "severe financial hardship and distress" as a result of the 'bedroom tax', a cross-party committee of MPs has said.

People stage a demonstration over bedroom tax outside the Liberal Democrat conference in Glasgow in September 2013. Credit: David Cheskin/PA Wire

The decision to reduce housing benefit payments from social tenants deemed to have a larger home than they need has hit vulnerable people who were not the intended targets of the reform and have little hope of moving to a smaller property, the House of Commons Work and Pensions Committee found.